The victory for charities, campaigners and Labour leaves an estimated £3.7billion black hole in government finances over five years.

Ministers were accused of "duplicity and disarray" after sneaking out the news in a written statement after Parliament finished sitting for the week.

(Image: Stefan Rousseau/PA Wire)

Friday's decision finally brings the government in line with a tribunal in November 2016, which said people who suffer "overwhelming psychological distress" when travelling alone should qualify more easily for PIP.

Ministers rewrote the law last year to avoid obeying the tribunal. But after an outcry by mental health charities, the High Court ruled the government's behaviour was “blatantly discriminatory".

Now the Department for Work and Pensions (DWP) has confirmed it will not appeal the High Court verdict.

The DWP will write to everyone who is affected to identify those who are entitled to higher benefits.

All payments will be backdated to 28 November 2016.

The original tribunal, known as MH, ruled the people affected should qualify more easily for the 'mobility' element of PIP.

Government documents predicted the change would hand new money to 143,000 people who previously received nothing for mobility. Half would receive the enhanced rate of £57.45 a week, and the other half the standard rate of £21.80.

She wrote: "After careful consideration, I have decided not to appeal the High Court judgment.

"My Department will now take all steps necessary to implement the [original judgement] in the best interests of our claimants, working closely with disabled people and key stakeholders over the coming months.

"Although I and my Department accept the High Court’s judgment, we do not agree with some of the detail contained therein.

"Our intention has always been to deliver the policy intent of the original regulations, as approved by Parliament, and to provide the best support to claimants with mental health conditions."

Mind charity chief executive Paul Farmer said he was “delighted”.

He added: "This is the right decision.

"More than 160,000 people will now be able to access support which could make the difference between whether or not people can get to work or appointments, see friends and family and live independent lives."

Laura Wetherly of the MS Society added: "This is much-needed recognition from the Government that mental difficulties can affect people’s lives just as much as physical symptoms.

"It will come as a huge relief to the thousands of people with multiple sclerosis."

The government failed to consult its own Social Security Advisory Committee before blocking the original tribunal last year.

Shadow Work and Pensions Secretary Debbie Abrahams said: "The Government was wrong to bring in the PIP regulations last year and it was wrong to ignore time and time again the views of the courts.

"Labour supported the initial Tribunal judgment and pledged in our manifesto to reverse the PIP regulations.

"This is yet more evidence of the duplicity and disarray of the Tories’ social security policies.”

Tory MP Johnny Mercer hailed the decision, saying: "I warned this was wrong and a mistake last year. Never too late to do the right thing."